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DOL Proposes Lifting Federal Restrictions on Tip Pooling

Posted on December 05 2017 08:56 PM

Proposal Leaves Treatment of Tips up to Employer & Employee

The U.S. Department of Labor (DOL) is proposing to rescind the current federal rule providing that tipped employees retain their tips except when contributed to tip pools limited to customarily and regularly tipped employees. The proposed rule would allow tip-sharing through a tip pool with employees who do not traditionally receive tips, such as cooks and dishwashers.

If finalized, the proposed rule would apply only to employers who:

  1. Pay a direct cash wage of at least the full federal minimum wage ($7.25 per hour); and
  2. Do not seek to use a portion of tips as a credit ("tip credit") toward their minimum wage obligations.

In addition, the proposed rule would also make clear that the treatment and disposition of tips is a matter of agreement between the employer and employees, or of state law

Click here to read the proposed rule.

For more information on the legal requirements related to wages, visit our section on Employee Pay.